Geographic clustering of massive computing infrastructure has made it increasingly difficult for developers to secure the insurance coverage required by traditional lenders. Disruptions at these facilities can trigger losses running into millions of dollars per minute, elevating the risk profile for standard policies. To counter these limitations, Aon is structuring targeted coverage pools, including a $10 billion data center facility and a $2.5 billion energy facility, to keep project capital flowing.
Key points
Inability to procure comprehensive insurance coverage threatens to restrict developer acc…: Inability to procure comprehensive insurance coverage threatens to restrict developer access to crucial debt market financing.
Consulting firms are actively guiding developers on physical site selection and facility…: Consulting firms are actively guiding developers on physical site selection and facility design to mitigate severe concentration risks.
Surging demand for complex infrastructure underwriting is helping support Aon's pending $…: Surging demand for complex infrastructure underwriting is helping support Aon's pending $17 billion acquisition of USI Insurance Services.
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The race to build artificial intelligence infrastructure is creating enormous new risks that could threaten financing for the data centers powering the artificial intelligence boom, according to Aon CEO Greg Case.
In an interview with CNBC Wednesday, Case warned that clustering billions of dollars of equipment and computing capacity in a small number of locations could make some projects difficult to insure, with consequences for developers seeking financing.
"If you create them and you build them on top of each other, you've created concentration risk in a way in which it makes it more difficult to get insurance," Case said.
"If it's more difficult to get insurance, that means the financing structure is going to change completely. You can't access the debt markets," he said.
The potential financial exposure from operational disruptions is staggering, Case said.
"Data centers are literally going to measure business interruption at millions of dollars per minute," he told CNBC.
The warnings come as technology companies accelerate spending on data centers, electricity generation and other infrastructure needed to support AI. Those investments are creating opportunities for…
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